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Shadow Brexit Secretary Sir Keir Starmer has also appeared to soften the Labour position, telling senior business figures that it was 'vital' to obtain the benefits of the single market and the customs union and 'how we achieve that is secondary to the outcome'.

Speaking at a Labour in the City event, Sir Keir said: 'Labour's objective is tariff-free access to the single market, no new red tape at customs and a deal that works for services as well as goods.

Mr McDonnell - the Labour leader's closest lieutenant (pictured together at party conference last year) - claimed last night Labour only wanted the 'benefits' of the single market and the question of membership was not important

Shadow Brexit Secretary Sir Keir Starmer (pictured during the election campaign) has also appeared to soften the Labour position

'It is vital that we retain the benefits of the single market and the customs union. How we achieve that is secondary to the outcome and should be part of the negotiations.

'We need to be flexible in our approach and not sweep options off the table.'

Their comments are a shift in Labour's position since Mr Corbyn told the Andrew Marr Show on Sunday that the UK must leave the single market as it is 'inextricably' linked with EU membership.

Liberal Democrat Brexit spokesman Tom Brake said: 'Labour need to come clean. Do they support staying in the single market or not?

Asked on Sunday if he would lead Britain out of the single market, Jeremy Corbyn (pictured on Sunday's Andrew Marr show) said 'yes'

'They are in total disarray on the biggest issue facing the country in a generation.

'The Labour shadow cabinet has taken more positions on Brexit than the Kama Sutra.'

The new row comes after Labour's campaign chief said Labour could still u-turn on Brexit if it senses public opposition hardening.

Andrew Gwynne claimed Labour could still be 'flexible' on its Brexit position amid a growing battle inside the party over Jeremy Corbyn's policy.

The Labour leader is backing the Government on taking Britain out of the EU single market and has a confused position on the customs union.

Andrew Gwynne (pictured on the campaign trail in May) claimed Labour could still be 'flexible' on its Brexit position amid a growing battle inside the party over Jeremy Corbyn's policy

Theresa May insists leaving both EU groupings is crucial to deliver Brexit because they open the door to cutting migration and striking new trade deals.

But Mr Corbyn is under growing pressure to soften his line, including from the powerful trade unions which have propped up his leadership and bankrolled Labour's general election campaign.

Mr Gwynne's confession came at a public event in London where he claimed Mr Corbyn's stance could become a 'political problem' for Labour.